The Tory swindle, mark 2
In the preamble to Mr Crossman's highly complex sixty-four-page White Paper on the Government's proposed new state pensions scheme, the Secretary of State for Health and Social Security claims that his proposals 'are based upon broad principles formulated in "National Superannuation," published by the Labour Party in 1957.' In the sense that Mr Crossman was responsible for both schemes, and his thinking has undergone a process of continuous, if often painful, evo- lution during the intervening twelve years, this statement is no doubt true. But to most people the differences will be more striking than the similarities.
Nevertheless, the new Crossman scheme does have an obvious precursor: the Boyd- Carpenter graduated pensions scheme of 1961. This became known in Labour circles, Unfairly, as 'the Tory swindle.' The name stuck to such an extent that, in the interests of clarity, the new scheme can best be under- stood as the Tory swindle, mark 2. Of course, the rates of benefit payable (that is, by 1992 at the earliest—the scheme does not reach 100 per cent maturity until well into the next century) are to be very much higher, Particularly as regards the graduated ele- ment. And the 'flat-rate' element will not be completely flat, but will be defined in terms of the national average wage during the tnan's working life, subsequently adjusted biennially to keep pace with inflation.
But the only important difference, at least on the benefit side, is one of degree: pen- sions will be a good deal bigger. There is a redistributive element as well, but it is rela- ttvely modest. As for the 'revolutionary' Pledge to increase pensions biennially in line With prices, this is less than exciting when it 18 recalled that, over the past fifteen years, periodic rises in state pensions have seen them increase, over the period as a whole, substantially faster than prices.
Indeed, on closer examination, the Gov- ernment's White Paper turns out to be one big hoax. Take for example, Mr Crossman's phantom equity. Deprived of the keystone of the original 'National Superannuation' plan, a National Pensions Fund to invest (like the private funds) in real equities, which can be shown to rise in value (with luck) each year, Mr Crossman assures us that, under his scheme, our contributions will 'earn' us a benefit which will steadily increase in value, year by year, in line with the national average wage, until retirement age is reached. But this phantom equity, with its 'guaranteed' growth, is simply an arbitrary book entry, devoid of all meaning, designed to delude the poor taxpayer into believing that his con- tributions somehow still belong to him (and are increasing in value) in a way that other taxes he pays do not. In fact, of course, as under the present scheme, his contributions are simply paying his father's pension, just as his son's will pay his.
Again, aware of the mounting public dis- affection with the 'national assistance society,' in which the improvident and feckless are helped by the state at the expense of the prudent and hardworking, Mr Crossman takes great care to stress that his new scheme will almost eliminate supplementary benefit from the pension field, and that in the new Utopia everyone will have had to earn what they get in benefits. Now the present situation, in which some 28 per cent of pen- sioners qualify for supplementary benefit, is obviously ridiculous. But since the im- provident and feckless are, on the whole, more likely to be on the receiving end of the redistributive element in Mr Crossman's scheme, it is somewhat disingenuous to sup- pose that, because what they receive will in future be called a pension and not a supple- mentary benefit, the disgruntlement of the prudent and hardworking will disappear.
This is not to say that there are not sensible innovations in the Crossman proposals. A final judgment must await the terms of the concordat (yet to be negotiated) with the pri- vate, occupational schemes over contracting out. And until these are known it is impos- sible to judge, not merely whether adequate scope for the private sector would remain, but also whether the introduction of the scheme will increase or decrease total savings. But the proposal that a widow should receive her husband's pension after his death is clearly right. So, too, is the only really important change in the scheme: the switch to graduated contributions based on earnings, in place of the inequitable flat rate stamp. So, also, in a negative sense, is Mr Crossman's refusal to be tempted by the fashionable cult of selectivity: the great pity is that he did not see fit to abolish the major element of selectivity in the present system—the iniquit- ous earnings rule.
Mr Crossman believes, rightly, that pensions should be higher than they are. As a socialist, he believes that the state, and not the private sector, should provide them —which means, inevitably, higher taxes. As a politician, he knows that higher taxes are unpopular. Hence his creation of a whole series of hoaxes, woven together in a system of immense and totally unnecessary com- plexity, simply to try and persuade people that the higher taxes are not really higher taxes at all.
Had he not been obsessed with this desire to pretend that higher state benefits can be conjured without higher taxes he could have produced a White Paper which would not only have been infinitely simpler and more honest : it would also have avoided the most glaring defect of the present plan– the non- sense of graduated benefits. For all that is really required is an increase in the basic fiat-rate pension to an adequate level, fin- anced by a system of gently graduated con- tributions. Any pension over and above that level should be left to each individual to secure (if, and only if, he chose to) through a private scheme tailored to his own require- ments.
But this commonsense and infinitely desir- able solution - flat-rate pensions and gradu- ated contributions—would have blown the gaff, severing the phoney link between the two. Hence the present nonsense, which simply makes the increase in contributions payable by the better-paid workers greater than it need be, merely in order to enforce inequalities of income in retirement. And the crowning irony is that, in his heart, Mr Cross- man knows that his whole vast hoax is bound to fail. The man in the street may not recognise a tax when he sees one— but he certainly recognises a tax when he pays it. Which is why, of course, the Govern- ment has insisted that the new scheme should not start to operate until 1972 after the next general election.
How sad it is to see so much ingenuity de- ployed to so little purpose. And what a pity that Mr Crossman, whose intentions in the pensions field are., on the whole, entirely ad- mirable, should not be prepared to trust the people.
